Exxon Shareholders Vote To Alter Company's Board To Reflect Climate Change Concerns

The vote was the first in ten years to pass over the Exxon board's opposition. The company has faced recurrent charges that it suppressed its own research which demonstrated the effects of carbon fuels on climate change. The question now is whether the Exxon board will act to more actively address climate change concerns or try to ride out the discord as it has done in the past.

There are arguments in favor of both approaches from a corporate governance standpoint, given the gravity of the environmental situation, the collapse in oil prices and the company's financial results. Exxon's history suggests that incremental rather than radical change is its most likely strategy but the size of the vote serves as a warning that those concerned about this issue are becoming stronger and more mainstream. JL

Benjamin Hulac and Mike Lee report in Scientific American:

The proxy access resolution is the first measure opposed by Exxon's board to pass since 2006 (and) received 62 percent support.
Stockholders at Exxon Mobil Corp., the world's largest private-sector oil company, passed a proposal yesterday to nominate outside candidates to the board, a move that could affect the company's decisions on climate change.
New York City Comptroller Scott Stringer, the fiduciary for New York city's five public pension funds, which invests about $150 billion, filed the proxy access resolution, which received 62 percent support.
The nonbinding resolution is the first measure opposed by Exxon's board to pass since 2006, according to Stringer's office. It allows investors who hold 3 percent or more of company stock for at least three years to nominate directors; similar resolutions have passed at dozens of other companies.
"If this company is to properly address fundamental long-term risks like climate change, its board of directors must be diverse, independent and accountable," Stringer said in a statement.
The vote touched off a debate among activists about the best way to get Exxon to change its approach to climate risks in the wake of last year's revelations that the company may have suppressed evidence on climate science.
Investors like the California Public Employees' Retirement System (CalPERS), the country's largest, have taken an incremental approach. Rep. Ted Lieu (D-Calif.)—along with many of the 60 to 70 protesters who picketed the meeting—wants pension funds to divest from Exxon, and some critics want to see Exxon face civil or criminal penalties.
Exxon faced 11 shareholder resolutions at yesterday's annual meeting. The majority related to climate change and Exxon's business plans to address climate change and greenhouse gas regulations. All but the proxy access resolution were defeated.

Lieu: Proxy access doesn't meet urgency

A resolution from the New York State Common Retirement Fund, which requested Exxon to publish a report on the long-term effects of climate change policies upon the firm, received 38 percent support.
Pete Grannis, deputy comptroller for New York state, said a group of shareholders clearly want the company to address climate risks.
"Exxon has a responsibility to its investors to explain how it can adjust its business to meet the global effort to reduce fossil fuel consumption," he said in a statement.
Attorneys general in Massachusetts, New York and the U.S. Virgin Islands are investigating whether Exxon misled investors or violated financial laws.
Exxon denies the allegations. Company officials have said the accusations are politically motivated and based on "discredited reporting funded by activist organizations."
While pension fund officials tout the passage of proxy access to address climate change and other corporate issues, they acknowledge that any results will take several years.
Lieu said he is tired of waiting. He has called repeatedly for CalPERS and other pension funds to sell Exxon shares.
"When you look at it, it basically has a path to put a person on the ballot for a vote that maybe, someday, can get one person on the board of directors that might think somewhat about climate. That is not going to change Exxon Mobil's behavior," Lieu said in an interview.
"There is a fierce urgency to address climate change, and the pension funds are fooling themselves if they think engagement is working," Lieu said.
In a March 29 letter to CalPERS CEO Anne Stausboll, Lieu and California Rep. Mark DeSaulnier (D) said they haven't seen "discernible evidence" that the fund's engagement efforts have triggered "any significant change" from Exxon on climate change.
Stausboll wrote back, saying change comes through patient engagement.
"If we were to walk away, we would lose that opportunity," she said.

Tight security amid protests

As shareholders pressed their cases with the Exxon board and CEO Rex Tillerson inside the Morton H. Meyerson Symphony Center, where the oil giant has held its meetings for years, protesters gathered across the street.
Carrying signs urging the divestment of Exxon stocks, the demonstrators made speeches urging climate regulation and shouted slogans like "Tick-tock, the time is up, climate action now!" and "Global warming is a war of the rich and upon the poor!"
The meeting took place under tight security. Dallas police officers stood at the front door and walked around inside the symphony hall in dark windbreakers. Attendees entered through metal detectors similar to those at an airport or football stadium. Exxon employees escorted reporters throughout the building, even following them to the men's room doors.
Exxon barred The Guardian newspaper from the meeting, citing its "lack of objectivity on climate change reporting," columnist Nils Pratley said in a column yesterday.
The meeting also attracted a loyal group of stockholders.
"If y'all don't like Exxon, why don't you go buy some solar stock?" asked one man, who described himself as a geologist. He said volcanic eruptions are to blame for climate change.
Another man broke into tears as he praised Tillerson for his work. "You personify all that is best in America," he said.